The number of people signing up for unemployment benefits dropped to the lowest level in two months last week, an encouraging sign that companies are not resorting to deeper layoffs even as the economy has lost momentum.
The Labor Department said Thursday that new claims for unemployment insurance declined last week by a seasonally adjusted 27,000, to 451,000. Economists had predicted a much smaller decline of 2,000. The number of new claims filed in the previous week turned out to be flat, versus a small drop as first reported. But that amount was a sharp decrease from the week before.
New applications for jobless benefits shot past the half-million mark in mid-August, the highest level since November. Since that spike, they have drifted lower. New filings for jobless benefits are at their lowest level since July 10.
Meanwhile, the four-week moving average of new claims, which smoothes weekly fluctuations, also fell last week, dropping by 9,250, to 477,750. So did the number of people continuing to draw unemployment aid.
Even with latest decline, new filings for jobless benefits are still much higher than they would be if the economy is healthy. When the economy is growing strongly and companies are hiring, requests for unemployment benefits fall below 400,000.
Last week, the government reported that the unemployment rate ticked up to 9.6 percent in August from 9.5 percent in July. Private employers in August added a net total of only 67,000 jobs in August. Job gains would need to be more than three times that to drive down the unemployment rate.
The unemployment rate has exceeded 9 percent for 16 months and is likely to extend that streak into next year.
Without more jobs, consumers are likely to spend cautiously, which would keep the economy mired in its slow-growth rut.
The economy’s growth has slowed sharply from earlier this year as the impact of the government’s stimulus package fades.
Companies are wary about stepping up hiring because they are worried about their sales and whether the economy will continue to lose momentum. But in recent weeks, companies have shied away from resorting to even deeper layoffs.